10/12/2011 @ 11:02PM3,438 views

Ending the Discussion of "Fair Share"

Let’s talk about “fair share.” President Obama certainly wants to. He’s “all in” on the notion that “the rich” don’t pay their “fair share” of taxes in this country. Indeed, he’s wagering his re-election on the bet that a majority of voters will agree with him. When the tyranny of the majority succeeds, Obama will win, too.

As parents, one of our most important tasks is to know when to say “no” to our children. We all recognize a “brat” when we see one — a child who’s never been told “no”, and whines and complains until he or she gets his or her way. ”Shame on his parents!”, or perhaps that’s not politically correct to say anymore. But bratty children grow up to be bratty voters, too.

Unfortunately our political system often rewards the political equivalent of the irresponsible parent. Using Other People’s Money, irresponsible politicians promise the world, and the bratty voters like it. Once elected, these politicians do their best to deliver the goods. It’s alright, they say, because of their interpretation of the General Welfare and Commerce clauses of the Constitution. Others beg to differ…

Sadly, under such a system, no amount of revenue to the government is ever enough, because human wants are themselves unlimited. Therefore, those with a lot of assets, with “a lot” being defined by the politics of envy, become natural targets for the boundless benevolence of these irresponsible people – voters and politicians alike.

Image by Getty Images via @daylife

At least one prominent media figure is finally on to the correct way to put a lid on this ruinous line of “fair share” reasoning. Most recently, it was Stuart Varney.

On his September 20th show, Mr. Varney put a simple question to a Democratic strategist, Mary Anne Marsh, in the context of discussing Obama’s plan to raise taxes on the wealthy. To paraphrase:

“What is the maximum percentage of income that someone should pay in taxes?”

It’s an arresting question, for several reasons.

For starters, it was literally arresting to Ms. Marsh. Upon repeated prodding from Varney she steadfastly refused to answer the question, which just tells you how toxic the subject is to believers in ever bigger government. This question is Kryptonite to their cause, pure and simple, and it became easy to see why.

The question hits directly at Man’s relationship to The State. With many top taxpayers paying over half of their income in various forms of taxes (yes, combining federal, state, local, property, Social Security, Medicare and so on — this is the only true measurement of taxation), just who are they laboring for, and why? Clearly at this point they are laboring as much for the State as they are for themselves.

But are there any incentive effects towards a person’s motivation to work when they have to give up so much of the fruits of their labor? As Varney asked later in the discussion, “Why not just raise the federal income tax rate to 60%”? Marsh wouldn’t answer that either. And of course we’re not even yet considering the efficacy of the spending that this tax revenue attempts to fuel.

I’d suggest that the “why” referenced above is the tyranny of the majority. Simply put, it is the legalization of theft. It is a majority of voters knowing full well that it’s wrong to break into their neighbor’s house and steal their stuff, even if they just intended to give it all away to the poor, but getting government to do it for them instead. Frederic Bastiat saw it coming in 1850:

The law perverted! And the police powers of the state perverted along with it! The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose! The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish!

If this is true, it is a serious fact, and moral duty requires me to call the attention of my fellow-citizens to it.

The question is further arresting when one tries to consider what the correct total percentage should be. During his 2008 Presidential campaign, Governor Mike Huckabee made the profound observation that if we all tithed, sent in 10%, to our various religious organizations, we wouldn’t need government to try to extract forty or more percent to do the things that our religious organizations could do instead. Clearly, on average, society has a problem in voluntarily complying even with a law from a much Higher Power. The voluntary 10% results in non-compliance, but a forced 60% under some circumstances might just be acceptable — go figure.

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“Skin in the game” nice smart ass remark. Just how out of touch are you? Even those who are too poo r to directly pay federal income tax pay plenty in taxes, directly (state local sales taxes, property taxes -think elderly on social security if you cannot wrap your head around that, federal taxes on gas and other products. Even if they are renters they indirectly pay for social security taxes, assessments etc.

And as far as real skin in the game, now many sons and daughters of your wealth friends are out there in Afghanistan and Iraq?

The rest of your post the usual conservative pablum. Oh woe is me I am wealthy and the poor want my money, when the reality is that the wealthy often do not pay their fair share of the commons, paying less than, as Buffett accurately points out, much less than middle income tax payers.

Are you talking about what is good for the country that provided the infrastructure and freedom to make the millions or is this just pure selfishness? We seemed to do very well in terms of GDP expansion, financial stability, overall income growth and low debt when income above one million was taxed above 90% in the 1950′s. We seem to be in a LOT of economic booms and busts since Reagan lowered taxes in the 80′s (only to raise many of them back up about 10 times). Why? Because instead of paying 30 million to a CEO as we do today, regardless of how incompetent, the companies reinvested their wealth into more and newer products, creating more wealth for everyone, instead of just one.

This is why a progressive tax makes sense. It allows for very comfortable living standards beyond what most people will ever attain yet makes sure that the additional government infrastructure that is needed which goes hand in hand with wealth is paid for. How many times have you flown an airplane this year? How many times have you taken a boat out on coastal waters? DO you have foreign investments that are protected by the economic and military might of America? My small business doesn’t make use of our court system beyond the one time to go after a deadbeat. But SESCO, and by extension you, certainly have made use of United States District courts in various suits regarding other businesses and tax matters. How many millions of your investments are regulated by the SEC and other government entities? The list of government services you use is very long. Mine is shorter. Yet proportionally I pay more taxes. Here’s an IRS challenge. Take 2 people. Calculate the tax burden for the single guy who makes 90,000 a year on schedule C from his work versus someone who makes a million from investments. The percentage is not even close.

Why do you feel you have the right to say that I should be satisfied with $400,000? Are you prescient to what I intend to do with it, or the original $1 million?

What if I was going to donate most of the $1 million, and can now only donate less than half? What if I was going to spend most of it and thus “create demand” for all sorts of products and services that Keynesians like Reich and Krugman are always calling for? All that “demand” would support a lot of jobs. What if I can create a particular new business with $800,000 and begin to employ people (ie, create jobs), but can’t do so with $400,000?

I could go on and on, but my guess is you would not be happy until you have control over the $600,000, my $600,000. And the problem is, you need to incite a bunch of envy amongst a majority of voters to get your hands on it.

Furthermore, government has an absolutely horrible track record of what they’d do with the $600,000. It’s one important reason why very rich people like Warren Buffett and Bill Gates seek to donate away most of their fortune while they can control where it goes. They’ve seen what government would do instead, and they’re saying, “no thanks.”

Lastly, and most importantly, is my hypothetical earning of 1 million a year somehow preventing you from doing the same? If so, let’s solve that problem instead, but I think an objective analysis would say that’s impossible.

——” It’s one important reason why very rich people like Warren Buffett and Bill Gates seek to donate away most of their fortune while they can control where it goes.”——–

Nothing wrong with that, that is the purpose of making charitable contributions tax deductible. They are making an effort to perform valuable services to society. I admire their efforts.

—–” Lastly, and most importantly, is my hypothetical earning of 1 million a year somehow preventing you from doing the same? If so, let’s solve that problem instead, but I think an objective analysis would say that’s impossible.”—-

You are probably right about that. I spend my time working with Wounded Warriors. They are my brothers and sisters. I work to provide a human face and heart to all the money the government “wastes” caring for veterans. Unlike a business, people die or are maimed for life to maintain a country. And this country does not exist because of their sacrifices(and those of their families) just to make profits and control for a few.

——–” All that “demand” would support a lot of jobs. What if I can create a particular new business with $800,000 and begin to employ people (ie, create jobs), but can’t do so with $400,000?”——-

You could do that quite easily. You could fund a venture capital fund and allow people who want to start a business access to funds to do so. People who want to work but have no access to bank loans to set up a business because they have nothing to start up with, and do not have the skills to make it all work yet. Such a fund would be self sustaining if it were a not for profit organization and reinvested profits earned in expanding services.

———” I could go on and on, but my guess is you would not be happy until you have control over the $600,000, my $600,000.”————-

It sounds to me like you are far more concerned with “mine, mine, mine”.

———” What if I can create a particular new business with $800,000 and begin to employ people (ie, create jobs), but can’t do so with $400,000?”———-

What if? I’d be far more inclined to believe your claims of altruistic and saintly self denial if the business you set up were a not for profit that turned profits back to improving the lives of others instead of going into your pocket.

I think that is the problem with the world, ever increasing profits are siphoned off into the pockets of a few. A few whose opinion that anything that doesn’t end up in their pocket is “wasted”

You sound like the BofA executives who wanted the government to bail them out because they had invested billions in OPM in junk assets to turn quick profits —and when they got bailed out, immediately turned around wanting to give themselves huge bonuses. Now, they want to raise fees something like 15 to 20 times cost, so they can keep employment up—then, a week later, fire 10,000 employees.

So, if as you say, low taxes make you into Saint Dean the Devoted, who provides jobs and charity out of the limitless goodwill of your benevolence—-how come after 8 years of tax cuts under Bush, extended for 2 years under Obama, and the lowest they have been for 60 years—-where’s the jobs?

I don’t believe that the middle class is disappearing because they are lazy welfare bums who want everything handed to them. I don’t believe that millions of people are losing their homes to foreclosure because it is so much easier to just to live in the streets on handouts. I don’t believe that 14 million people can’t find decent jobs because they haven’t looked.

I think it all comes down to the one thing you seem to favor most, control. And, Ending the Discussion of “Fair Share”. I think the only control you are interested in is your own control. I think the only share you are interested in is what you can grab to put in your own pocket, fair or not.

Actually under 10 years of Bush tax cuts, we have proof that job creation is not it’s highlight. When the bush tax cuts were initiated there were 132 million non farm payroll jobs. As of the August employment numbers it was 131 million. Under Clinton tax hikes which Republicans said would ruin the economy, the US produced more than 20 million jobs Net income for the middle class? Down. Poverty rates? Up.

The only way I can possibly prove you wrong is to encourage you to read more of my columns. Sound bites don’t work here.

I applaud you for your work with Wounded Warriors. I support similar organizations as well.

My point is only that there has to be a limit on what any particular citizen is asked to pay to fund their country’s priorities, and I’d suggest we’re past that limit. If we still don’t have enough money, then our “priorities” are in fact just limitless “wants”, and it is flat out wrong — no apologies there — to incite one voting block to go after the resources of another.

Flat tax rates are inherently fair. The more you make, the more you pay — no deductions, no social engineering, no politics, no crony capitalism. Too bad we don’t have such a system.

I’m 100% against bailouts of any kind. You can see my previous Forbes column about that. I’m sorry that you don’t seem to count the beneficial services that most companies provide to their customers as “improving the lives of others.” Those that don’t provide that function deserve to go out of business, if only government and society would let that happen. Under free markets, the companies that make the most money over time are the ones that provide the largest total benefit to society. That is true capitalism. Anything else isn’t. What’s sad is that we’re increasingly forgetting that as a country founded around something much closer to it.

I’m no anarchist. I’m more than happy to contribute “my fair share” to what some might call “the commons” that no person could possibly achieve on their own. Free trade goes a long, long way towards achieving that by the way, AND is the world’s greatest unsung peace plan. It also has the very nice side effect of producing a lot fewer wounded warriors.

But if you want to accuse me of wanting control over most aspects of my life, including the lion’s share of my earnings, yes, guilty as charged. I want the same for you.

There is a way to end this all. No one wants to take away anything from you. And you do not have to give up anything.

The US currently imports about 70% of its petroleum. This is costly in the neighborhood of $800 billion dollars per year of trade deficit.

We need to not use oil. We have obviously past Peak Oil. It is costing us dearly to use oil. The last three wars the US has become engaged in have oil as a root cause. Oil is destroying the US economy, and our environment.

We have no need of oil. Biofuels can do anything that can be done with oil, cleaner, safer, cheaper and better.

We can make biofuels, ethanol, biodiesel, and biomethane(natural gas) from any type of biologic material at all, including sewage and landfills. Most of which is waste now. Over 90% of the crops we grow are unusable waste we can make biofuels out of.

Place an import tariff on imported crude oil and finished petroleum products. Remove all subsidies from all energy sources. If anyone does not want to pay a tax on petroleum—-then they can use a biofuel produced in the US. This will lower or eliminate the foreign trade deficit—-and provide jobs here in the US, for workers who live here and spend their wages here. The standard measure to determine new income impact on a community is that each new dollar introduced into the local economy is circulated 7X per year. A new factory in a community with a payroll of $1 million/yr = $7 million impact on the local economy. The higher we make the tariff on imported oil—the greater the impact on building the US economy by keeping $$$ here. The greater the tariff, the greater the advantage to using biofuels made here that are not taxed.

The more biofuels we make here, the higher the GDP becomes. The higher the GDP becomes, the lower the national debt becomes in relation to debt as a percent of GDP.

If YOU want to keep a greater percentage of what you earn—-make it so that a greater percentage of ordinary people can make enough money to provide for their needs.

THAT is true capitalism.

There is the way to attack the true enemy. We need to be making our own energy here—not importing it from despots and monarchs and terrorists.